10-Q 1 0001.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended March 31, 1997 Commission File Number 0-17165 SUNSTYLE CORPORATION (Exact name of registrant as specified in its charter) Florida 59-2905386 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 36460 US 19 N., Palm Harbor, Florida 34684 (Address of principal executive offices) (Zip Code) Registrant's Telephone Number, Including Area Code (727) 789-8899 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Title of Each Class Number of Shares March 31, 1997 Common Stock, $.10 par value 1,096,014 Name of Each Exchange on Which Registered: None PART I - Financial Information Item 1. Financial Statements SUNSTYLE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, December 31, 1997 1996 ----------- ----------- (Unaudited) (Unaudited) ASSETS Cash $ 204,287 $ 205,019 ---------- ---------- Total Assets $ 204,287 $ 205,019 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Notes Payable to Former Parent $ 255,000 $ 255,000 Interest Payable to Former Parent 93,452 93,452 Accounts Payable and Accrued Expenses 16,500 17,500 ----------- ---------- Total Liabilities $ 364,952 $ 365,952 ----------- ---------- Stockholders' Deficit: Common Stock; $.10 Par Value; Authorized 10,000,000 Shares; Issued and Outstanding 1,096,014 Shares $ 109,601 $ 109,601 Additional Paid-in Capital 1,341,221 1,341,221 Accumulated Deficit (1,611,487) (1,611,755) ----------- ----------- Total Stockholders' Deficit $ (160,665) $ (160,933) ----------- ----------- Total Liabilities and Stockholders' Deficit $ 204,287 $ 205,019 =========== =========== The accompanying notes are an integral part of these consolidated financial statements. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) FOR THE THREE MONTHS ENDED MARCH 31, 1997 1996 ---------- ----------- Revenues: Interest Income $ 2,330 $ 2,266 ---------- ----------- 2,330 2,266 ---------- ----------- Costs and Expenses: General and Administrative 2,062 1,730 Interest 0 5,472 ---------- ----------- 2,062 7,202 ---------- ----------- Net Income (Loss) $ 268 $ (4,936) ========== =========== Net Income (Loss) Per share $ .001 $ (.01) ========== =========== The accompanying notes are an integral part of these consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) FOR THE THREE MONTHS ENDED MARCH 31, 1997 1996 ----------- ----------- Cash Flows from Operating Activities: Net Income (Loss) $ 268 $ (4,936) ----------- ----------- Adjustments to Reconcile Net Income (Loss) to Net Cash Provided By Operating Activities: Change in Operating Assets and Liabilities: Notes Receivable 0 47 Interest Payable to Former Parent 0 5,472 (Decrease) in Audit Payable (1,000) 0 ----------- ----------- Total Adjustments (1,000) 5,519 ----------- ----------- Net Cash Provided by (Used in) Operating Activities (732) 583 ----------- ----------- Net Increase (Decrease) in Cash (732) 583 Cash at Beginning of Period 205,019 198,600 ---------- ----------- Cash at End of Period $ 204,287 $ 199,183 =========== =========== The accompanying notes are an integral part of these consolidated financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) March 31, 1997 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES: Basis of Preparation The unaudited financial statements presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-K for the year ended December 31, 1996. In the opinion of management, these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to summarize fairly the Company's financial position and results of operations. The results of operations for the period may not be indicative of results to be expected for the year. Reclassification Certain items in the 1996 financial statements have been reclassified for comparative purposes to conform with the financial statement presentation used in the 1997 statements. Federal and State Income Taxes Substantial losses have been sustained by the Company which raises considerable doubt as to its ability to continue operations. As a result of the above, it is unlikely that the Company will be able to benefit from the approximately $2,902,000 in tax loss carry forwards available as of December 31, 1996. Therefore, no provision has been made in these statements for any deferred tax benefit. NOTE 2 - CONTINGENCIES AND OTHER EVENTS: The Company is negotiating the settlement of its outstanding debt to its former Parent. Although it is possible that a settlement could result in the transfer of essentially all remaining assets to its former Parent, the effect of a final settlement cannot be determined at this time. In addition to the uncertainty discussed above, the Company has sustained substantial net losses and has a deficit net worth at March 31, 1997, of $160,665. These issues raise considerable doubt as to the Company's ability to continue operations. Management has not adopted a plan of liquidation. The consolidated financial statements do not include any adjustments that may result from any of the above events. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS March 31, 1997 Results of Operations For the Three Months Ended March 31, 1997 and 1996: Interest income increased from $2,266 for the three months ended March 31, 1996, to $2,330 for the three months ended March 31, 1997. Interest expense decreased from $5,472 for the three months ended March 31, 1996, to $ 0 for the three months ended March 31, 1997. General and administrative expenses increased from $1,730 for the three months ended March 31, 1996, to $2,062 for the three months ended March 31, 1997. As a result of the above, the Company had a net loss of $5,614 in 1997 compared to a net income of $268 in 1996. Liquidity and Capital Resources Due to continuing losses in a depressed market, the Company ceased construction activities and terminated all employees during May of 1991. All remaining real estate assets were sold. The Company's liabilities are primarily to its former Parent in the form of an unsecured note ($255,000), interest on the note and other payables. The Company is currently negotiating the settlement of its outstanding debt to its former Parent. In addition to the uncertainty discussed above, the Company has sustained substantial net losses and has a deficit net worth at March 31, 1997, of $160,665. These issues raise considerable doubt as to the Company's ability to continue operations. Management has not adopted a plan of liquidation. The consolidated financial statements do not include any adjustments that may result from any of the above events. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SUNSTYLE CORPORATION (Registrant) Date: July 26, 2000 By:/s/Ralph W. Quartetti Ralph W. Quartetti, President Chief Executive Officer and Chief Financial Officer